SCOTLAND'S commercial property sector has experienced its first investment market downturn for five years, as major institutional players pull back, writes Scott Reid.

According to research by property consultancy Lambert Smith Hampton
(LSH), the dominant role of institutional investors such as a banks,
insurers and hedge funds, has fallen from 70 per cent of total
purchases in 2001 to just 25 per cent last year. It noted that more
private and overseas investors were ploughing money into offices,
retail property and industrial buildings.

Overall, the total
value of investment market deals fell by 11 per cent to £3.3 billion
during 2007. Only £1.2bn change hands in the second half. The office
and retail sectors were hit hardest by the slump in activity, with
falls of 26 per cent and 18 per cent respectively.

Bill Binnie,
head of investment for Scotland at LSH, said: "People have been aware
that the dominance of institutional investors has been on the wane for
a while, but now, we can see the reality of this.

"It shows how
the market has changed and how property has matured as an asset class.
This is healthy, giving the market a broader spread of investors and
therefore in the long term it should experience less instability."

He
added that current market conditions presented "some interesting
opportunities" for buyers, with a strong "off-market" deal culture
returning.